Regulation is the silent force shaping our everyday lives. From the medicines we take to the flights we board, regulatory bodies ensure safety, fairness, and order. Yet, in India, regulation is often an afterthought, undervalued, underfunded, and frequently caught in bureaucratic limbo. The recent Union Budget 2025−26 highlighted the need for regulatory reforms, with a focus on deregulation and updating outdated laws. But this raises a crucial question: How do we strike the right balance between oversight and flexibility?
Regulation can either propel industries forward or shackle them in red tape. Too many rules stifle innovation and create compliance nightmares; too few lead to market failures and public harm. The challenge is not just about writing better laws, it is about enforcing them effectively, ensuring regulators are independent and competent, and fostering a culture of respect for regulation itself.
Missing respect for regulation
A good regulatory framework identifies market failures and intervenes strategically. Regulators must be well-informed, well-staffed, and respected by both the state and private sector. Unfortunately, in India, regulation is often treated as an administrative burden rather than a strategic function.
Many state pollution control boards are severely understaffed, yet they are expected to monitor thousands of industrial entities. Official vacancy data only scratches the surface of a deeper issue: the lack of a clear framework for determining how many regulators are needed. Underfunded and overburdened, these bodies struggle to fulfill their mandates, leaving industries either unchecked or drowning in delayed approvals.
Bureaucratic bottlenecks
Another major issue in India’s regulatory landscape is how regulators are appointed. Too often, these bodies are staffed by retired bureaucrats who, while experienced, may lack domain-specific expertise or the independence required to push for meaningful reforms.
Regulators are meant to function independently to avoid conflicts of interest. However, when they are predominantly drawn from the ranks of retired government officials, they often bring the same bureaucratic mindset and political ties that undermine their autonomy. As a result, regulatory bodies risk becoming extensions of government departments rather than neutral arbiters of industry standards.
Chaos of multiple regulators
A persistent debate in India’s regulatory framework is whether we need a single, overarching regulator or multiple specialised bodies. India’s technology sector faces regulatory inefficiencies due to overlapping jurisdictions, leading to compliance confusion for businesses. With data protection, digital content, and cyber laws governed by different authorities, the lack of a unified framework increases operational complexity and slows innovation. However, centralising all regulation under one authority is also not the solution. Instead, improving coordination among existing bodies is the key.
Another sector like aviation is regulated by the Airport Authority of India (AAI), the Directorate General of Civil Aviation (DGCA), the Bureau of Civil Aviation Security (BCAS), and the Airports Economic Regulatory Authority of India (AERA). Each has a distinct role, but their lack of coordination creates bottlenecks for businesses and consumers alike.
India’s pharmaceutical sector is a glaring example of regulatory dysfunction. The government’s attempt to enforce mandatory generic drug prescriptions recently backfired due to concerns over the quality of generics available in the market. Many developed countries have similar mandates, but the issue in India is weak regulatory enforcement. The Central Drugs Standard Control Organisation (CDSCO) lacks strong rule-making powers and is heavily dependent on bureaucrats with limited pharmaceutical expertise. Additionally, India’s fragmented drug regulation system, with 37 state-level regulators, makes it difficult to ensure uniform quality standards. Without more transparency and accountability, public trust in drug quality will continue to erode.
Urgent need for data protection
Data privacy is another area where India’s regulatory framework is struggling to keep pace with modern realities. Despite the Supreme Court’s landmark ruling recognising privacy as a fundamental right, the Data Protection and Privacy Law passed in 2023 are yet to be fully implemented. The law’s rules are still under consultation, leaving citizens vulnerable to data abuse and misuse.
For marginalised communities, the lack of clear data protection mechanisms can have serious consequences, from financial fraud to targeted discrimination. Regulators must balance privacy concerns with the practical realities of data-driven economies. Delaying implementation only exacerbates vulnerabilities, making it imperative for policymakers to move swiftly.
Charting a path forward
So, where do we go from here? The answer lies in a combination of investment, coordination, and transparency. Regulators should operate independently from government influence ensuring decisions are based on technical expertise rather than political considerations. Instead of consolidating all regulations under one entity, better inter-agency coordination is required to reduce inefficiencies and regulatory conflicts. Transparency must be enhanced so that regulatory decisions are publicly accessible, fostering trust among businesses and citizens. Finally, whether it is drug safety laws or data protection regulations, delayed implementation undermines trust and exposes citizens to risks.
Beyond strengthening regulations, there is also a need to determine when deregulation or re-regulation is necessary. The challenge lies in assessing when and how to deregulate or re-regulate a sector. This requires regular impact assessments, data-driven evaluations, and consultation with stakeholders to ensure that regulatory interventions are timely and effective. As India strives to become a global economic powerhouse, making thoughtful decisions on regulation, deregulation, and re-regulation will be crucial in shaping a thriving economy.
(The CDPP held a conference in Hyderabad on March 28, 2025, titled “Development Policy and Practice Conference, March 2025.” This article is based on the panel discussion on “Regulation in India to Move Towards Excellence.”)
Sejal Gupta is a Senior Research Fellow at the Centre for Development Policy and Practice (CDPP). She is associated with the CDPP Regulation Project, covering emerging, infrastructure and consumer sectors.
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